Is there a given formula for that? Im currently a scalp trader(tp=5,st=5),but I would want to move on to longer time frames to get more spare time, as scalp trading require constant watching. Any ideas on a good road to take? Im thinking about investing 6 hours of book studying each day for four months, which amounts to about 700 hours. I thought i would focus on candlestic , i.e reading Japanese Candlestick Charting Techniques - Steve Nison,and maybe 30-50 other books. Then summarizing the most relevant facts into an essay, and then analyze what could be useful, and in what manner and combination if they are applied to the market. After that i would try out the combinations of tools that I thought would be relevant on a demo account for 2 months, trying to find right combinations etc and see what works and doesnt through experience. Does that sound like a good proper start?
how much longer are we talking? longer term time frames are driven by fundamentals more than technicals... i read dozens of books and spent thousands of hours thinking about this stuff, candlesticks included, but it was not until i realised that fundamentals (macro trends) are what drive the longer term time frames that i began to find success. technical indicators are of little to no value for this stuff imho, charts can help you confirm that your fundamental view is correct. read some jim rogers, or triumph of the optimists maybe. i like the idea of putting your thoughts in order in an essay...if you choose to go the purely technical route make sure you are using the scientific method to validate your ideas as well.
p.s. unlike scalping where you get instant feedback and can develop expertise very quickly from the sheer number of trials, long term trading takes a long time to develop because the feedback happens rather slowly. i don't think 700 hours of reading is any substitute for this...just like 700 hours of reading would be no substitute for 700 hours of scalping...
30-50 books No that sounds like a waste of time. If you can scalp but you wish to trade longer time frames, just study the longer term charts and how they reacted to news. Just like any type trading, observe your quarry look at the past through charts and events. Watch it live during the hours you wish to trade, develop a plan then execute.
700 hours and 30-50 books sounds like overkill to me, what are you planning to do, you won't be able to see the wood for the trees! First scrap your scalping-5-pips plan, then pick a simple strategy to trade (any one will do, they all work pretty much and in time you'll find one that's a good fit for you), get your money and trade management sorted out, develop discipline to trade your chosen plan and have a shot at it with a small account. Plan on burning the first couple of accounts while you try different things out so make it money you can afford to lose. That should take you, oh, a day or two before you're ready to open your first live account, discipline will take a little longer to master but you'll pick that up and develop as you progress. You're trading currency pairs, it's really not rocket science, up/down/sideways, how difficult can that be? People make way too big a deal of this.
Thanks for the informative post. I looked into some jim rogers and the triumph of the optimists, these are however a bit geneal and not purely focused on the currency market. I guess there are no book that only focus on the fundamental side of forex? I guess you are referring to some backtesting system? Which one would be the best backtesting software? There are dozens of them. By the way, i was thinking about moving on to 15-50 tp/st. Preferably finding a system where you can set the orders before hand.
Metatrader4 is a good way to learn how to back-test strategies. The MT4 language is reasonably easy to learn, it's free, and there's already scores of strategies and indicators available. Although, this software won't necessarily tell you what systems will work - but it is a quick way of seeing what won't work. But what ever you do, don't use MT4 to trade with - the brokers associated with it are not the most reputable.
Holding currency for weeks/ months will work anything shorter is suicide. Forget all the candlestick crap what is the economy doing?is the currency being bought? And what are other currencies doing in relation to it. INVEST in currrency.
well i think you begin to find as you delve deeper into understanding what makes various markets move, currency or otherwise, that they are all interrelated. i don't do backtesting, but i'm sure there are lots of folks on this site that can help you with that. my point was simply if you are going to do the technical analysis thing, use some kind of validity testing.
I have read from various sources on TA that the more liquidity and greater the time frame, the better that technical analysis actually works. I tend to agree with this looking at US indicies for instance, which yield themselves very good to technical analysis on daily, weekly, and monthly. That said, in the beginning when I started trading and all I did was swing trading with several weeks holding time, it took me a year to learn the same amount of stuff that I learned in ~2 months after getting my feet wet in intraday trading. Constant feedback is good...